In the future of media, which is now, everybody is a network. In the past, networks were defined by control of content or distribution. But now, you can’t own all distribution and content is controlled where it’s created. So, I wonder, where’s the value and where’s the money in the fully networked world?

What is a network now? Your friend pointing you to something to read or watch is a network. The collection of people putting a YouTube video on their blogs makes a network. BlogAds bringing together 800 blogs for an MSNBC.com ad buy is a network. When you subscribe to a collection of feeds, or when you publish up a blogroll, or when you put a tag on your blog post, or when you use a Flickr tag that others use, you are a network.

Networks are about sharing now; they used to be about control. Networks are two-way; they used to be one-way. Networks are about aggregation more than distribution; they are about finding and being found. Networks are now open while, by their very definition, they used to be closed. You join networks and leave them them at will; you can join any number of networks at once and content can be found via any number of networks, there is no practical limit. Networks used to be static. Now networks are fluid.

For us, the people formerly known as consumers, this is a better world. We can find the content we want from anywhere by relying on networks we trust because we know them more intimately and they even know us; we are no longer a one-size-fits all mass. For content producers, which is any of us now, it’s also better, for the barrier to entry — and to the public — is destroyed. And for content itself, it’s better because the good stuff can be found, amended, corrected; it can live longer and live in context.

But what about the networks themselves? Where is the value in networks now? Where is the money?

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The old networks are hosed and they are finally realizing that. Suddenly, the dominoes are tumbling, all at once. We all know the latest signs:

ABC pissed off its old channels of distribution — broadcast affiliates, cable system operators, and retailers — by putting up its shows on iTunes and online. Umair Haque says they didn’t go far enough and that’s true, but I say this journey begins with a single step and ABC’s first step was a doozie.

Warner Brothers, in turn, is willing to piss off its channels of distribution — namey, networks like ABC — by doing a deal to sell shows directly to consumers via Bittorrent. Who needs networks?

At the same time, Ad Age reports that Bolt found “only one in four 12- to 34-year-olds can name all four major broadcast networks: ABC, NBC, CBS and Fox.” I tried that experiment at home with my teen son and he couldn’t name them, either (“uh, ABC… NBC… CNN?”). My preteen daughter has no idea what broadcast is. The power of the networks as distribution platforms and brands is diminishing fast.

On the business side, the old networks have no end of new competition. The scarcity economy is over; networks cannot continue to raise their rates even as their audiences shrink, because they no longer control the clock; there is always somewhere else to reach audiences — somewhere more efficienct and less expensive, by the way. The upfront buying season for commercials is going on now and the only way the networks can save themselves from the inevitable shrinkage Warren Buffett predicts for newspapers is by coming up with blockbusters. But as Umair Haque points out often, the blockbuster economy is not a longterm winner and it is getting riskier and riskier. See also Seth Godin: “If your marketing strategy requires you to hit #1 in order to succeed, you probably need a new marketing strategy.”

On the “consumer” side, the people formerly known as viewers have taken control of what, when, and how they watch and they do it without commercials.

And of course, the networks face no end of competitors in content, as well. Rocketboom now has twice the audience of many cable news shows because the stranglehold the networks had on distribution and audience is over. The audience is on stage. Your customers are your competitors.

Or maybe not. The smart network response to all this is to liquify. You let your stuff be found anywhere, in any medium and any network. You let your public distribute for you (see Jon Stewart’s Crossfire rant). Most important — and this is where Umair said ABC should have been going next — you should recommend good stuff to people and it shouldn’t be just your stuff; you use your relationship, trust, and resources to aggregate stuff and audience across the world of possibilities. (This is essentially what I’m also suggesting to the BBC in my Guardian column this week, coming soon.) In the old static-network world, it made no sense to send people to other networks; in the new, fluid world, they’re going to go there anyway, and so the best thing to do is to help them find the best stuff, redefining the value of a network. And from a business perspective, I argue, you’re wise to grow audience and ad inventory across open networks of the stuff you recommend. Umair says that ABC took a good move in unbundling content from distribution but what it should really be doing is rebundling content with audiences:

Rebundling is where value capture will happen – at communities, reconstructors, markets, networks – that direct people’s attention to individualized ‘casts. This is where branding will be reborn – and where advertising is already being disrupted, ripped apart, and reborn (viz, Google, PPC, pay per call, etc)

Add to this Om Malik arguing that by giving and selling their shows directly to the public, the networks and producers are also disrupting the folks who thought they were the networks of the future: portals.

And see John Hagel saying that networks have a choice between content and relationships.

The most powerful brands in the media business will be held by successful intermediaries that help to consistently improve return on attention for audiences. In the process, the nature of the brand promise will change in a profound way. It will be a massive opportunity for media companies that understand the shift in economic and competitive dynamics and that focus on the rebundling plays required to build these brands.

There’s another way to frame the strategic opportunity/challenge for media businesses going forward. In addition to unbundling and rebundling of content, media companies face a choice: do they want to remain product businesses or do they want to become audience relationship businesses? …

Of course, media companies have elements of both embedded in their companies today, but their hearts and minds are firmly in the product business. Here’s the test: how open is the media company to providing access to third party content on behalf of their audiences? ….

[A]udience relationship businesses take these proliferating content options as an opportunity, rather than a challenge. The more options there are, the more value that can be created by organizing, packaging, presenting and adding to these options for specific audiences.

I agree that we’re headed to a relationship/aggregation economy in media. I think that networks will become fluid, ad hoc, two-way, and open.

But then I still have to come back to the question: Where is the value in fluid networks? Where is the money? I don’t know the answer. For once, I won’t even pretend to.

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These seem to be the choices:

If you just recommend great content, you may build a trusted relationship and a strong brand. But how do you get money — with ads people see on the way to the destinations you recommend? OK, there’s certainly value there. (See BoingBoing, Instapundit, and portals.) But I don’t know how much, or how many will make much, or how long it will last.

If you just aggregate content in full (that is, presenting the complete content over linking to it), you may have viewers but you soon won’t have content, for the creators will want the traffic to come to them in their space serving their goals. (See Yahoo, Breitbart, Blogburst.)

If you just sell ads on these recommended places, you can make money and so can the sites. (See FM Publishing, BlogAds.) I’ve been pushing for an open — and fluid — ad marketplace.

If you just make content you will, of course, have value, but you won’t recognize that unless your stuff is seen and that means you need to be part of networks or have to spend marketing dollars. (See any producer, publisher, writer.)

The advantage of the old, closed networks, of course, is that they combined all this: ABC recommended the show by putting it on the air; it aggregated the content; it aggregated the audience; it sold the ads; it shared the revenue. Life was so simple. Well, so much for that. So what systems will serve the interests of producers, audiences, aggregators, and advertisers?

I wonder whether success in the future, even in an open world, will depend on offering more than one of these aspects of fluid networks:

* You put together recommended sites and sell ads across them.

* You create content and aggregate others’ content.

* In a different context, one of the smartest media execs I know proposes another hybrid model that shares ad revenue between destination sites (to give them the motivation and resources to do good work there) and sites that send them traffic (to motivate them to do that).

But the added complication in all this is that you won’t join just one network. You’ll go to multiple places to get recommendations, and you’ll want your content to be linked on many places to get traffic, and ideally you’ll be able to get ad revenue from multiple sources. This suggests an even more complex hybrid model: He who sends you traffic gets to share in (and perhaps sell) ad revenue based on the traffic sent. So if Instapundit sends me traffic, I give him a share of my revenue for doing so. Or I let my content appear on another site via, say, Blogburst, in return for a piece of their ad revenue. It’s getting overcomplicated very quickly.

Sorry for this overlong treatise on networks. My point, in the end, is only that we are entering uncertain and uncharted waters in fluid networks. It’s not clear where the value will be captured and how it will be shared.

: LATER: See also David Galbraith, Kevin Werbach, and Cory Doctorow on the post-scarcity economy.